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Which is better, a shorter-term or longer-term car loan?
I don't know how long my car loan should be. Is one with a shorter term better, or vice versa?
Jim Donaher · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Generally speaking, a shorter-term loan is better. You’ll pay off your balance more quickly and pay less interest with a lower rate and shorter term. Plus, once your loan is paid off, your car will have a higher resale value.
The one problem is that a shorter-term loan will come with a high monthly payment if you can’t make a large down payment. If the proposed monthly payment on a shorter-term loan is unaffordable for you, then you may be shopping beyond your means.
View full answer
- Gregory R.
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